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2 Feb 2023

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India Has Made Progress But a Heavy Lift Remains

The Indian government has announced a commitment to reach zero GHG emissions by 2070, and has said it will invest 350 billion rupees (about $4.3 billion) to the cause. This is two decades beyond the recent COP26 goal of reaching zero emissions by 2050.

Compare this investment to a World Bank estimate that India will need to invest $840 billion over the next 15 years to upgrade its urban physical infrastructure alone to meet needs for clean drinking water, a reliable power supply, efficient and safe roads.

The government investment promise seems to be part of a much grander vision, though, as one analyst recently said the country will be seeking $1 trillion in climate finance.

India's Heavy Lift
India faces a very heavy lift in addressing its emissions-abatement future. India is already the world's third-largest GHG producer (after China and the US), at around 2.5 billion tons annually. Its economic efficiency (measuring its GHG output versus the size of its economy) is only 25% that of the US and 75% that of notoriously inefficient China.

To be fair, India's per capita emissions are very low by world standards, only 11% that of the US and a quarter that of China.

And the people and government of India have already been doing a heavy lift for three decades. Per capita income has been on a steady rise since the early 1990s when the country started to open its economy to the world, and has particularly risen during the new century as it focused increasingly on technology.

Even More IT Jobs Needed
Today there are more than 5 million IT jobs in India, with well-known tech centers in several cities throughout the country. Its $3 trillion economy is now the fourth- or fifth-largest in the world, depending on the source. Adjusted for the cost of living (called purchasing power parity GDP), India has the world's third-largest economy, behind only China and the US.

Yet its apparent economic success is more a function of its enormous population than personal income. India is still classified as a Frontier Market, the fourth of five income tiers measured by IDCA Research. Its economy is 20% the size of China's, with roughly the same number of people.

Indeed, India is set to surpass China as the world's most populous country this year or next. India currently has slightly more than 1.4 billion people. The total is expected to rise to more than 1.67 billion by 2050, in a world that is expected to peak by that time and that will see a population decline in China.

India's 5 million IT jobs trails only China and the US, albeit by a significant margin. China has almost three times the IT jobs as India, representing 1.1% of its population. India's percentage in this area is just 0.4%. The US sits at 3.8%. India, despite all its recent progress, must continue to develop its digital infrastructure and IT industry at all due speed to make its economy not only big, but strong enough to be truly competitive with the other top economies in the world.

IDCA Research Shows the Scope of the Challenge
IDCA Research has modeled an ideal percentage of 2.5% of a nation's people involved in IT. Following this would require almost 30 million more IT jobs in India. The world deficit totals more than 100 million in this model.

Further, India's current electricity grid delivers about 17% of the power per capita in comparison to an average grid in the EU. To build the sustainable electricity sufficient to bring India's overall up to 25% would require an investment of more than $150 billion; to bring it to 40% of an average EU grid would require more than $800 billion, according to IDCA Research.

Building up the IT sector, the physical and digital infrastructure, and the sustainable electricity grid sufficient to vault India from its current economic status as a Frontier Market to a higher category will thus require a continued heavy lift, by India's people, government, and investors in the country.

Thus the Indian government's commitment to reach zero emissions by 2070 falls well short of COP26 expectations, and is far enough out – almost 50 years away – to look like kicking the can down the road rather than addressing climate change seriously. However, given the very large amount of investment and effort that will be required to develop the country significantly, the goal may indeed be realistic.

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